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Interview with Leigh Sales, 7.30 Report

Transcript

12 Mar 2018

Sydney

Prime Minister

Steel; TPP; Budget; Newspoll

E&OE

LEIGH SALES:

Even the Labor Party is crediting the Turnbull Government with a diplomatic win. For persuading the Trump administration to exempt Australia from tariffs its set to impose on steel and aluminium. The US shift towards protectionism has been condemned around the world, including by Australia's Foreign Minister Julie Bishop last week. She said it could spark a global trade war. Australia’s exemption is good news for local jobs, although the global effects could end up reverberating here anyway.

The Prime Minister Malcolm Turnbull joins me now, welcome to the program again.

PRIME MINISTER:

Great to be with you Leigh.

LEIGH SALES:

In President Trump's tweet about exempting Australia from the tariffs, he wrote, "We're working very quickly on a security agreement so we don't have to impose steel or aluminium tariffs. What did he mean by security agreement?

PRIME MINISTER:

Well it's really just short hand for the legal work that needs to be done, the proclamation that has to be put in place in accordance with the Executive Order. But there is no additional - an addition to ANZUS or anything other security arrangements we have at all.

LEIGH SALES:

So how do you know that he meant you know, the paperwork?

PRIME MINISTER:

Well I had the discussion with him. So I know exactly what we discussed, and we didn't discuss any new security agreement at all. So-

LEIGH SALES:

Was your discussion before or after that tweet?

PRIME MINISTER:

Well, my discussion was before the tweet and the White House came straight in touch with us and the Embassy to make it quite clear that the commitment to exempt Australia was given, it’ll be followed through, but there does need to be some legal, you know, paperwork to be done. There needs to be a proclamation done in accordance with the requirements of the Executive Order.

LEIGH SALES:

The reason I ask, is just because you know, it is the President of the United States saying ‘security agreement, which is sort of an usual form of words.

PRIME MINISTER:

Well again, the whole Executive Order is premised on national security, that's the rationale behind the Executive Order imposing the tariffs. But the important thing is, that the President recognises that America's trade relationship with Australia is fair and reciprocal.

There are no tariffs on American exports into Australia. And in fact, the Australia-US trade relationship is a very level playing field and I think one that the President is likely to hold up to other countries and say: ‘that's the sort of fair deal I'm looking to get’. The US has a trade surplus with us, as it happens, and they have had for a very long time. But it's a level playing field and that’s what the President recognises.

LEIGH SALES:

Australia is a long-time supporter of free trade. Julie Bishop was warning last week in New York that America's embrace of protectionism could spark some sort of global trade war. Have we expressed our dissatisfaction with the US more generally about these sort of protectionist moves?

PRIME MINISTER:

Well in terms of free trade Leigh, when the United States pulled out of the Trans-Pacific Partnership, the largest multilateral free trade agreement in the world at the moment, going on in the world at the moment, a lot of people said it was finished. It was all over. Bill Shorten said I was on a vanity project, I was deluded, wasting my time. And there were plenty of other people that said it was dead. Now I took the lead on that, I persuaded Shinzo Abe this was something that we could work together on when he was down-

LEIGH SALES:

You're not addressing my question about US protectionism.

PRIME MINISTER:

Just let me go on though. So what we did was when President Trump decided to pull out of the TPP, we kept it going. It’s just been signed. So Australia's leadership on free trade is absolutely obvious, it is evident, we have done it. We kept alive this massive free trade agreement.

LEIGH SALES:

But the substance of my question is America is embracing this protectionist path, there are concerns that it’ll spark a global trade war. Have we expressed our dissatisfaction to the US about that? And also what-

PRIME MINISTER:

Leigh of course we have, Australia speaks about the importance of free trade everywhere.

Now the President's specific policies on trade, on steel and aluminium are matters for him. Now we have secured this exemption and that is because of the fair and reciprocal trade and indeed, security relationship with the US, as the President acknowledged. But as far as we are concerned, Australia is a strong advocate for free trade and open markets.

And the point about the TPP, is that our advocacy, it goes beyond giving fine speeches at international conferences. What we've done is actually secure the signature to a big trade agreement that will deliver thousands of jobs to Australians, thousands of jobs. We've delivered that, at a time when many people said it was dead and there was no prospect, it was pointless to continue.

LEIGH SALES:

In the government's diplomatic push to have Australia exempted from these tariffs, your ministers highlighted Australia's military cooperation with the United States since the Second World War. Now that Australia has explicitly connected -

PRIME MINISTER:

Since the First World War actually.

LEIGH SALES:

Since the First World War. Now that Australia has explicitly connected our security relationship with our deservedness for a trade deal, have you given the US permission to do the same, by asking for example for military cooperation in exchange for trade favours or other favours?

PRIME MINISTER:

Well these things have never been linked in that way Leigh and the important thing to remember is that the relationship between the United States is as close as the relationship between two nations could be.

LEIGH SALES:

But I’m pointing out that you have linked those things in the recent negotiations.

PRIME MINISTER:

That's not right. I mean you've got to be very clear about this. We have our economic relationship, we have our security relationship, we do not make economic decisions you know based on a security, you know a military commitment somewhere.

LEIGH SALES:

So you don't think President Trump would think he has some leverage say on getting our cooperation in the South China Sea because he's done you this favour and the Manus resettlement favour?

PRIME MINISTER:

Leigh I can assure you, I’ve actually had the conversation with President Trump about this on Saturday. I’ve had many conversations with President Trump about trade and about security.

I just want to reiterate we have a fair and reciprocal and very close economic and trade relationship. We have the closest possible security relationship. The United States knows that it can always count on Australia to defend freedom's cause and we have done that consistently over a century.

LEIGH SALES:

So would that - would that, for example, extend to cooperating in operations in the South China Sea? In exercises?

PRIME MINISTER:

Well, Leigh, I'm not going to speculate on particular operational matters but Australia and the United States have been together, side by side, in freedom's cause for a hundred years. Since July 4th, 1918, when General John Monash, the Australian general, led Australian and American forces into battle together in France.

Now we have celebrated, honoured, 100 years of mateship and shared sacrifice, and the freedoms both nations enjoy have been won by the sacrifice of generations of Australians and Americans defending freedom together over 100 years, and I am sure that we will do so for another 100 to come.

LEIGH SALES:

Let's turn to some other issues, the federal budget is in a couple of months. Can you give me in one sentence the theme of this year's federal budget?

PRIME MINISTER:

Jobs. Jobs and opportunity. Guaranteeing the essential services that Australians need, and deserve, and bringing the budget - as we have committed to - back into surplus.

The critical thing that we're delivering are the jobs, the economic growth, that Australians expect.

On jobs, one of the most persistent problems in the economy that a lot of economists would identify is flat wages. People aren't getting paid wages rises. How are your policies addressing that because creating new jobs isn’t the same as getting you a pay rise in your existing job?

PRIME MINISTER:

Well people are getting pay rises, but they're not sufficiently – they’re only just above inflation. So that is the concern, lack of strong growth in real wages. But we're starting to see that growth emerging. As the Governor of the Reserve Bank has said recently, the laws of supply and demand have not been suspended. So you get stronger economic growth, more businesses investing more, you'll get more employment, you get greater productivity, you get higher wages. So that is the key. It is that strong economic growth.

And the big difference between my government and our opponents in the Labor Party, is they do not have one policy that would encourage one business to invest one dollar or hire one new employee.

LEIGH SALES:

You’ve previously said that this year’s budget will include some kind of tax relief for middle income Australia. Can you clarify whether this year it will include personal income tax cuts?

PRIME MINISTER:

That, our goal, as you know, our aim, our focus is to provide tax relief for middle income Australians - further tax relief. We have already done that of course.

LEIGH SALES:

In the form of personal income tax cuts?

PRIME MINISTER:

Obviously. But we've, the timing and the extent of that is dependent obviously on the state of the budget. The budget’s eight weeks away, so we haven't got long to wait.

LEIGH SALES:

Also, will you be sticking with your company tax cuts even though-

PRIME MINISTER:

Yes.

LEIGH SALES:

Okay. Taking them to next election as part of your election campaign?

PRIME MINISTER:

Yes, well assuming - our aim is to get them passed before the next election obviously. But we are committed to them.

And Leigh again, we can theorise about this. You know you can you bring a few professors of economics here, and they can say ‘oh company tax you know shouldn't be lower than 30 per cent’. Okay, they can have that view. In the US, it's now 21 per cent. So if you're a company and you've got the opportunity to invest, to invest your capital in Australia or in United States, are we serious that we're going to sit there with a 30 per cent company tax rate and think we're competitive?

Paul Keating recognised this, former Labor leaders have recognised this, Bill Shorten used to recognise this when he was in government, you've got to have a competitive company tax rate. This is about jobs, it will put $750 a year into the average worker's pocket, it will add $17 billion to GDP. There is a reason why we cut company taxes years ago, because they were too high. Do you know we're now the equal highest company tax rate in the OECD? How do you compete for investment on that basis?

LEIGH SALES:

Before we finish up, as we all know when you challenged Tony Abbott for the prime ministership, one of the reasons that you cited was he lost 30 Newspolls in a row. You said it was evidence that the public had made up its mind on his leadership. You are about to hit the same benchmark, notwithstanding a turnaround. Let me play you something that your predecessor had to say on radio last week.

THE HONOURABLE TONY ABBOTT MP, Member for Warringah – AUDIO

It was the Prime Minister who set this test and I guess if he fails the test it will be the Prime Minister who will have to explain why the test was right for one and not right for the other. It’ll be up to him to tell us all why the test doesn't apply in his case.

LEIGH SALES:

That's a valid question, isn't it?

PRIME MINISTER:

Well the only test that determines whether you lead the Liberal Party or not is having the support of the Party Room. That’s the test.

LEIGH SALES:

But come on, everyone knows what you said.

PRIME MINISTER:

Yeah.

LEIGH SALES:

He's outlined a pretty legitimate question there. Why is what was good for the goose not good for the gander?

PRIME MINISTER:

Well the reality is that the Party Room determines who leads the Liberal Party.

LEIGH SALES:

No, no I’m asking you – you set that benchmark, I’m asking you why didn't it apply to you, yourself?

PRIME MINISTER:

But what should apply to me, what are you suggesting I should do Leigh?

LEIGH SALES:

The same standard that you applied to Tony Abbott, that you lost-

PRIME MINISTER:

What are you suggesting I should do?

LEIGH SALES:

I’m not suggesting that you’re doing anything.

PRIME MINISTER:

Are you suggesting that I should do what Tony Abbott did?

LEIGH SALES:

I’m not suggesting that you do anything. I’m asking you to justify-

PRIME MINISTER:

Well

[Laugher]

LEIGH SALES:

If you don't intend – so for example if you don’t intend to step down, or open a leadership spill when you hit the 30, what do you intend to do because you set that standard?

PRIME MINISTER:

Well, Leigh, when I challenged Tony Abbott, I identified a number of things. The most important point I made was that the country, the government needed new economic leadership, right? And it needed a return to traditional cabinet government.

I have delivered both. 403,000 jobs. You want a test for good economic leadership? I think the strongest jobs growth in our nation's history probably passes the test. Traditional cabinet government, I think everyone in Canberra would agree that that's what I'm conducting.

LEIGH SALES:

Do you regret-

PRIME MINISTER:

As far as, Leigh, as far as the leadership of the Liberal Party is concerned, it is as John Howard always said, in the gift of the Party Room. That is the test.

LEIGH SALES:

Do you regret opening it up - this constant questioning about polls, because you yourself were the one who put it on the table?

PRIME MINISTER:

Well it’s an observation I made in the course of mounting a challenge but others are free to refer to it, of course.

But the fact is that the leadership of the Liberal Party is determined by the Party Room. It's not determined by Newspoll, it's not determined by the 7.30 Report, it's determined by the Party Room. That’s the test.